Among the more promising breakthroughs in cancer treatment has been immunotherapy, which is being hailed in some sectors as the future of cancer treatment. But like most breakthroughs and new therapy introductions, the counterbalance to improved survival rates is the high cost of these therapies and how payers are addressing those costs. Immunotherapy has been making waves in cancer treatment due its ability to increase progression free survival from months to years while reducing the toxicity and side-effects observed with conventional therapy. The U.S. Food and Drug Administration (FDA) approved 20 drugs for oncology in 2015, of which 9 were immunotherapies.
Despite the clinical success of immunotherapy, cost remains a hurdle. According to data from America Society of Clinical Oncology (ASCO), cancer-related costs could exceed $173 billion by 2020 given the current rate of cancer growth. Paying for immunotherapy could pose considerable problems given the resistance of CMS and private insurers in covering approved and recommended drugs. For instance, when Bristol-Myers Squibb’s Opdivo (nivolumab) was recommended by the National Comprehensive Cancer Network (NCCN) as a second-line treatment of non-small cell lung cancer (NSCLC), some private insurers were reluctant to cover it.
The situation with Medicare is similar because various insurers across the country have different policies when it comes to which drugs they will cover. Checkpoint inhibitors such as (Keytruda) pembrolizumab and (Opdivo) nivolumab come with a hefty price tag of almost $30,000 per injection and the combination of these are priced no less than $100,000 per month. The combination of Opdivo and Yervoy is priced at $256,000 per patient in the U.S. The fact remains that these treatments are not curative, and the high costs associated with the treatment could push patients to forgo treatment.
To address the cost issue, payers and pharmacy benefit managers are increasingly applying a value-based approach to oncology drugs – weighing benefit and contribution to a patient’s quality of life against cost. PBMs such as CVS and Express Scripts have rolled out programs to determine the pricing and access to cancer drugs based on their value per indication.
The PBMs explored the concept of value-based contracting with the highly-priced cholesterol-lowering PCSK9 inhibitors, following the enormous success of this initiative PBMs are now extending this program to cancer drugs as well. Express Scripts launched its Oncology Care Value program in 2016, which is aimed at aligning cost of treatment with its outcomes. The program will focus on prostate cancer, lung cancer, and renal cell carcinoma for 2016. The U.S. Department of Health and Human Services also recently launched an initiative called the Oncology Care Model to encourage high quality and more coordinated cancer care. This five-year initiative will see participation form more than 3,200 oncologists and will cover over 155,000 Medicare beneficiaries.
With a number of life-saving personalized therapies making their way through the cancer drug pipeline, it will be interesting to see how the payers and PBMs continue to evolve their business model to address higher costs. For instance, Chimeric Antigen T-cell therapy also known as CART therapy has been generating a lot of buzz for the treatment of B-cell malignancies. So far, the clinical trials show promise for the future of this therapy and assuming this therapy crosses all the regulatory and manufacturing hurdles, it is expected to be priced at approximately $500,000 per patient.
Given that cost, it is likely that payers and PBMs would include it in their formulary only if deemed cost-effective and would possibly implement this as a late-line therapy. The increased intensity in payer cost management techniques could mean that it will be more difficult for expensive cancer drugs to penetrate into payer formularies.